As telecommunications giant MTN starts to recover from a turbulent 2016, new CEO Rob Shuter is laying the growth foundation to leverage future opportunities through an enhanced six-pillar strategy.

Shuter, who took the reins in mid-March, unveiled the development of a new growth plan – dubbed ‘Bright’ – set to be refined in the next six months.

“We have a new strategic framework,” he said when presenting the group’s financial results for the first half of the year.

This followed a fundamental strategic review of the business and its processes and broad engagement on strategies and future plans to ensure optimal operations and capture the opportunities the company believed would manifest in the years to 2020.

Unpacking the group’s half-year results for the period ended June 30, Shuter told media and analysts that the population of its key markets was expected to expand by 45-million to 700-million by 2020, with consumption per capita growth to rise by $40 to $1 243 in the next three years.

In addition, it is expected that there will be 500-million data subscribers and 250-million digital subscribers across the markets in which MTN operates.

“MTN is well-placed to capture this growth,” said Shuter.

With a new strategy in play across all 22 operations, MTN expects to secure an aggregate R575-billion in revenue from its consumer market, R210-billion from enterprise and R30-billion from wholesale by 2020.

The Bright strategy builds on six strategic pillars comprising best customer experience; returns and efficiency focus; ignite commercial performance; growth through data and digital; hearts and minds; and technology excellence.

The framework leverages on work done over the past 18 months to rapidly scale mobile money, accelerate the enterprise unit, implement a dual data strategy, enable a practical customer experience programme and deliver on the already established Ignite programme.

Launched in the fourth quarter of 2016 in South Africa and Nigeria, the operational execution programme, Ignite, will introduce special measures to accelerate the business and financial performance, with aggressive targets to unlock enhanced agility, sustainability, efficiencies, innovation and profitability.

The anticipated end result is the creation of a path to accelerate MTN’s revenue growth and diversification through group digital services, the enterprise business unit and tower investments.

Over the next six months, MTN will establish clearly defined initiatives and key performance indicators for each of the six areas of Bright.

“We expect these initiatives to support improved top-line growth, earnings before interest, taxes, depreciation and amortisation (Ebitda) margins and cash flow over the medium term,” Shuter noted.

Ultimately, the company aims to prove it is the best custodian of assets in a difficult market.

“The priority is for us to get our affairs in order,” he said, demonstrating first that it could seamlessly manage existing assets before expanding into other markets.

We have made good progress,” he assured attendees at the results presentation at MTN’s Roodepoort headquarters.

Results
Despite significant challenges during the period under review, new CFO Ralph Mupita reported a return to profitability for the company that had plunged into the red last year for the first time in its two- decade history.

Local currencies were weaker against the rand and the dollar, one-off items impacted on basic earnings, nonoperational items weighed on headlines earnings and the one-off impact of MTN’s disposal of Afrihost in the prior year all contributed to a difficult half-year, which in constant currency reporting improved year-on-year.

During the first half of the year under review, MTN’s profit after tax returned to the black, surging 178.8% to R4.9-billion, compared with the loss of over R6-billion in the corresponding period last year.

MTN’s reported headline earnings per share (HEPS) for the first half under review swung into positive territory at 217c, compared with the 271c headline loss per share reported in the first six months of 2016.

In the comparable period, HEPS was as much as 474c as a result of the Nigerian regulatory fine, while, in the current period, the Nigerian regulatory fine interest unwind reduced HEPS by only 24c.

Earnings per share climbed to 290c in the first half of this year, from a loss of 301c in the prior comparative period.

Ebitda increased 29.2% to R24.4-billion during the six months to June 30.

An 18.6% decline in revenue to R64.4-billion was reported for the first half of this year.

Subscribers contracted 3.6% to 231.8- million, attributed to a decline in subscriber numbers in MTN Nigeria and MTN Ghana, in addition to the group’s initiative to modernise subscriber definitions to reflect the business’s changing mix of revenue streams.

“The implementation of the modernised definitions continues and is expected to be completed by the end of the year,” Shuter noted.

MTN also reduced its capital expenditure guidance for 2017 from R34.8-billion to R30-billion, mostly owing to the struggling dollar liquidity in Nigeria.

Looking to the next six months, Shuter explained that mid-single-digit service revenue growth and Ebitda margin expansion of between 50 and 100 basis points year-on-year were expected for South Africa, while Nigeria was expected to deliver upper-single-digit year-on-year revenue growth.

The company still has its sights set on a Nigerian Stock Exchange listing for the latter operation by 2018.

MTN declared a total dividend of 250c a share for the half-year under review.